Is there a higher loan amount available during festive seasons?

Yes, it is commonly observed that financial institutions provide higher loan amounts during festive seasons compared to regular periods for the same gold collateral, though this should not be taken as standard practice. Here are a few points to understand:

• A higher loan amount is typically offered by increasing the Loan-to-Value (LTV) ratios (within the Reserve Bank of India sanctioned limits) by certain percentage points for the promotional festival schemes.
• Offering discounted interest rates for short periods also allows loan providers to disburse higher principal amounts without increasing the Equated Monthly Instalment (EMI) burden proportionately.
• Providing higher loan amounts can be an important marketing strategy to attract customers during festive offers.
• The risks of default are somewhat balanced out as the post-festive incomes of borrowers allow loan repayment.
• However, borrowers should make their own assessment of repayment capacity before simply availing of the higher festival loan amounts. Restraining to regular eligible amounts may be advisable in some cases.

Overall, the loan amounts sanctioned are sometimes observed to be higher during festivals, but actual utilization should align with the borrower's prudent requirements and repayment ability.